The Internal Revenue Code is Title 26 of the U.S. Code. It contains more than 3.4 million words. Printed 60 lines to the page, it would fill more than 7500 letter-size pages.
The Code is just the bare bones of the tax law, but there are a lot of bones. The regulations issued under the Code, which appear in Title 26 of the Code of Federal Regulations, contain something like ten million words.
If you read at the average speed of 250 words per minute, and you spent eight hours per day, five days a week, you could read all of the Code and the Regulations by the middle of November. By that time, Congress would have probably added more Code provisions (to simplify the Code) and the Internal Revenue Service would have added more Regulations (to clarify what the previous Regulations did not clarify), so you might well have to keep reading until after Thanksgiving.
The Internal Revenue Code is marvelously constructed so that it all fits together. There are about 25,000 cross-references and thousands of definitions.
The Internal Revenue Code is all abstract. Nobody has ever seen a deduction or a depreciation allowance or a tax basis. It is, in its own way, as mysteriously complex as the world of quarks and muons is in the realm of the physicist. It is a marvelous linkage of concepts and words and phrases. Alice (from Alice in Wonderland) would love it.
At the same time, there is a certain reality in the tax law. If a tax plan is set up so that there is no possibility of making a profit, and all that flows out of the transaction is a loss for tax purposes, the courts will reject it. We will discuss some of these schemes on our website, as well as other material, for which we do not have space in this column.
If someone invites you to participate in a tax-saving scheme, and it does not appear to make economic sense to you, the chances are that it will not make economic sense to the IRS and the courts, either. Let us take a look at it before you consider investing in the arrangement - we may save you from loss of your money, and from penalties and interest.
